Income Tax Appellate Tribunal - Delhi
Dcit (International Taxation), New ... vs M/S. American Asia Pacific Llc, New ... on 5 January, 2018
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'D' NEW DLEHI
BEFORE SHRI G.D. AGRAWAL, PRESIDENT
AND
SHRI K. NARSIMHA CHARY, JUDICIAL MEMBER
I.T.A. No.596/Del/2016
Assessment Year: 2005-06
Dy. Commissioner of Income-tax, vs M/s Americom Asia Pacific LLC,
International India P.Ltd. C/o Pricewaterhouse Coopers,
Circle 1(1)(1), Intl. Taxation, New Delhi. 11-A, Sucheta Bhawan, Vishnu Digamber
Marg, New Delhi.
(Appellant) (Respondent)
Appellant by: S/Shri Arvind Rajan, Divesh Dhawan, Abhinav Vij
Respondent by: Smt. Ritu Sharma
ORDER
PER K. NARSIMHA CHARY, JUDICIAL MEMBER
Challenging the order dated 30/11/2015 in appeal No/52/14-15 passed by learned Commissioner of Income-tax (Appeals)-42 (hereinafter referred to as 'learned CIT(A)), Revenue preferred this appeal.
2. Facts in brief are that the assessee is a non-resident Limited Liability Company incorporated under the laws of USA, and for the assessment year 2005-06 they have filed their return of income on 28/10/ 2005 declaring nil income computing the revenues as in the nature of business profits and were not subjected to tax in India in 2 accordance with article 7 of the Indo US a Double Tax Avoidance Agreement. During scrutiny assessment, by order dated 28/12/2007 passed under section 143 (3), Ld. AO held that the provision of Satellite Transmission Services are liable to tax in India as royalties for the use of process as well as equipment falling within the ambit of section 9 (1) (vi) and article 12 of the Indo USA DTAA. Subsequently by the notice dated 20 82,012 under section 148 of the Act, Ld. AO sought to reopen the assessment for the purpose of taxing the royalty income at a higher rate of tax of 20% as being attributable to the PE of the assessee in India, and assessed income chargeable to tax at 20% on a gross basis. In appeal, Ld. CIT(A) notice of that while passing the order under section 143 (3) of the acts, the clauses of the agreement with the customer was examined in detail and held that the revenue salad under the said agreement fall within the taxable ambit of "royalty" as defined under section 9 (1) (vi) of the Act read with article 12 of the Indo USA DTAA. Ld. CIT(A) also observed that any new fact which were concealed earlier have not come to the notice of the Ld. AO but it is a case where, on a reconsideration of the same set of facts, the Ld. AO had drawn a different inference on the application of the Act and the DTAA. He, consequently, held that it is not a valid ground to initiate the assessment proceedings. Ld. CIT(A) accordingly allowed the appeal. Aggrieved by this order revenue preferred this appeal before us.
3. Ld. DR placed reliance on the assessment order. Ld. AR brought to our attention paragraph No. 3 of the reasons for issuance of notice under section 148 of the Act and submitted that is only on the consideration of the very same material which Ld. AO considered at the time of original assessment, Ld. AO thought of enhancing the rate of tax, and for want of 3 compliance with the requirement of proviso to section 147 of the Act, the proceedings are bad.
4. We have gone through the record. Ld. CIT(A) recorded that while passing the order under section 143 (3) of the Act, the clauses of the agreement with the customer was examined in detail to hold that the revenues earned under the said agreement falls within the taxable ambit of "royalty" as defined under section 9 (1) (vi) of the Act as well as Article 12 of the Indo USA DTAA. The same agreement was considered for the reopening of the assessment. This assertion by the Ld. CIT(A) goes uncontroverted. It could be seen from the record that the original assessment under section 143 (3) was done by order dated 28/12/2007, notice under section 148 of the Act was issued on 28/03/2012. Such a notice was issued well beyond the expiry of the period of 4 years from the end of the assessment year. Proviso to section 147 of the Act requires that no action shall be taken under section 147 after the expiry of 4 years from the end of the relevant assessment year, unless income chargeable to tax has escaped the assessment for such assessment year by reason of the failure on the part of the assessee to make a return under section 139 or in response to a notice issued under subsection (1) of section 142 or section 148 or to disclose fully and truly all material facts necessary for his assessment, for the assessment year. Vide paragraph No. 3 of the reasons for issuance of notice under section 148 of the actor, D ever recorded that,-
"3. Perusal of the assessment record reveals that in the assessee's case, the royalty income amounting to Rs. 11, 01, 33, 135/-was taxed @15% under the DTAA. However, as the royalty income had been earned from the dependent agent in PE-based the on an agreement dated 21/8/2001, it was to be taxed at the rate of 20% on grass basis instead of 15%."4
5. It is, therefore, clear that it is not in consideration of any new material or because of failure of the assessee to disclose fully and truly all material facts necessary for his assessment, Ld. AO proposed to reopen the assessment proceedings, that too, beyond the period of 4 years. The conditions required under the proviso to section 147 are conspicuously absent in this matter, as such, we concur with the findings of the Ld. CIT(A) that since it is a matter where, on the consideration of the same set of facts, a different inference was drawn and such a course is not permissible. We accordingly hold that the reopening proceedings cannot be sustained in law. While upholding the findings of the Ld. CIT(A), we find that the grounds of appeal are devoid of any merits and are liable to be dismissed.
6. In the result, appeal of the revenue is dismissed.
Order pronounced in the open court on this the 5th day of January, 2018.
(G.D. AGRAWAL) (K. NARSIMHA CHARY)
PRESIDENT JUDICIAL MEMBER
Dated: 5th January, 2018
'VJ'
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(A)
5. DR, ITAT
By order
5
Asstt. Registrar